Archives of “January 29, 2019” day

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Read these 12 Books to become A Better Trader/Investor

  
  Education
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1. The Talent Code by Dan Coyle.  There are four ingredients for being good at anything, thus trading.  Domain knowledge, critical feedback, sustained energy, and purposeful practice.  Train with these ingredients to find trading success.  

2. Golf if Not a Game of Perfect by Bob Rotella.  Confidence trading a $GOOG or $SPY is something built and essential.  This book, written by a top sports golf psychologist, helps you learn to build real confidence.  

3. The Daily Trading Coach, by Dr. Brett Steenbarger.  Dr. Steenbarger is the Coach K of coaching in the trading world.  

4. Bounce by Matthew Syed.  This book studies why a small cluster of young lads in England became the best table tennis players in the world.  This read emphasizes the importance of great coaching for elite performance.  

5. Drive by Daniel Pink.  When we were young our parents preached, “Find something you love and do it.  The rest will take care of itself.”  Dan offers a better thought, “Do what you do.”  If you are not trading, then how can you really love trading?  In today’s world the barrier for entry into trading is almost nothing.  Paper trade, open a small account, back-test.  But you should be trading if you love trading.  Do what you do!
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How to become contrarian?

  
  Education
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contrarian11. Come to the market with a trading plan. Most traders don’t have a plan built around high odds trade set ups. Thus, they trade random patterns.

2. Put in the necessary work. You can’t be like most traders and just show up to the markets expecting to make big money in a short period of time. Don’t be like most traders; become contrarian. It takes hard work and study. Prepare yourself to trade well.

3. Enter on reactions, not on breakouts. Most traders see the market begin to move and then jump in. These dog-piling events are made-to-order for professional traders to act. They unload when the herd is buying, and stock up when it is selling. Adopt a professional’s attitude and look to sell into strength and buy into weakness.

4. Work on the mental side of trading, not just the technical side. Understanding how to read the chart is vital, of course. But it is not enough. Once the technical side is learned, trading becomes 100% psychological. Most traders think psychology is unimportant until it is too late. Be contrarian and put time in to learning the mental skills needed to trade well.

5. Keep learning. Not just about the markets but about your own performance, too. Most traders take a losing trade and sweep it under the rug. They try to forget about it. Likewise, they don’t bother to study their winning trades. They have little idea of why one trade worked and another didn’t. Be contrarian: review your trading and keep a journal.

Becoming contrari (more…)

Secret to trading success: You

  
  Education
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“You are the weakest part of your system”. That is a defeatist statement and completely untrue. It makes your expectation to fail easier to accomplish and more importantly it makes failure easier to handle. It shifts the pressure away from you and unto fate.

Would you fly on an airline if their motto was “Our pilots are the weakest part.” I do not think so. You are your system. Even if your system is automated you added the inputs, parameters.

Taking responsibility for your action is not easy. Taking control of the outcomes of trading or life is a huge responsibility. You will have moments of weakness, but you are not weak. The market does not go straight up and either does the road to success.

Writing your trading plan?

  
  Education
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  1. Why am I trading? This is not a trivial question to ask; and you must answer it honestly. Are you trading to make money? Or are you trading for the thrill? In other words, are you trading like an investor or like a gambler?
  2. What are my trading goals? Again, not a trivial question. Are you trying to gain a few dollars for extra spending money? Trying to fund your retirement? Trade for a living? Or are you trying to amass a fortune and retire early to a life of luxury? How you answer this question will identify the level of risk that you will have to endure.
  3. What is the size of my trading account? An obvious question.
  4. What is my skill level? Be honest.
  5. What is my tolerance for risk? And does that tolerance bear any relation to my skill level? It’s no good having a high tolerance for risk if your skills are inadequate.
  6. What must I do to improve my skill level?
  7. If my skill level is low, what trading size can I use to ensure that a single bad decision will not wipe me out? Preserving capital and staying in the game long enough to LTP good trading practices is crucial.
  8. What is my preferred trading instrument and have I familiarized myself with the behavior, range and velocity of that instrument? Some trades, like bonds and the ETF’s can move at a glacial pace.
  9. What indicators will I use to identify my entries and exits? Here, “the more, the merrier” may not be the wisest choice. Remember, there can be paralysis by (over)analysis.
  10. Where will I place my initial stop; and how will I manage them? You may have a trailing stop strategy, or you may plan to just exit when your indicators say, “Get out!”
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